Hard to See Recovery in These Numbers

Another day of economic data that doesn’t spell raging recovery.

Industrial Production

Capacity utilization increased slightly from 68.1% in June to 68.5% in July. Industrial production was up 0.5% which is the first increase in that number since December 2007. Manufacturing production was up 1% but that was almost entirely due to auto companies ramping up production after their summer shutdown which was exacerbated by the bankruptcies of GM and Chrysler. Taking autos outo fo the equation, manufacturing was up 0.2%.

Overall, the economy still has enormous excess capacity. Their is nothing in these numbers to suggest that new investment will be needed for a prolonged period of time, which is just one more anchor to drag around. (more: here)


Consumer prices were flat. They rose 0.1% in July. Given the employment picture and the low utilization of productive assets, any inflation scenarios have to be considered fanciful. This gives the government a lot of leeway to continue pumping out money with little fear of igniting the inflation fuse. (more: here)

Consumer Confidence

Consumer confidence is a number that bounces around a lot and I tend to not take too seriously given its propensity to reverse course. Nevertheless, given the expectation for it to rise this when it actually fell from 66.0 in July to 63.2 this month, it probably deserves to be noted.

Linking it to the dismal retail sales report yesterday, reinforces the argument that the consumer isn’t remotely prepared to lead the economy out of the doldrums. They are scared to death, broke or think they might be soon and aren’t at all ready to come out of their cave. (more: here)

The numbers today don’t point to any incipient disaster but they certainly don’t show any strength that we can expect to build upon. We might well get a recovery of sorts in the third quarter simply because the economy won’t continue to shrink indefinitely. The problem is that there don’t appear to be any fundamentals on which to base long-term robust recovery.

About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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